How a former lobbyist became the US broadband industry’s worst nightmare

Tom Wheeler tells Ars why he turned on the cable and wireless industries.

When President Obama nominated Tom Wheeler to lead the Federal Communications Commission (FCC) in May 2013, there was widespread concern the new chairman would push the interests of telecommunications companies instead of standing up for the American people.

Further Reading

After all, Wheeler had been the top lobbyist for both the cable and cell phone industries, having worked for the National Cable Television Association (NCTA) from 1976 to 1984 and the Cellular Telecommunications & Internet Association (CTIA) from 1992 to 2004. Though he had left those jobs years before, people wondered if a former lobbyist would properly regulate the industries he once represented.

“Obama’s Bad Pick: A Former Lobbyist at the FCC,” said the headline in The New Yorker on the day after Wheeler's nomination. Consumer advocacy groups such as Free Press and the New America Foundation’s Open Technology Institute publicly doubted whether Wheeler would be tough on his previous employers.

“My history has always been working with the insurgent, not the incumbent.”

Meanwhile, the companies Wheeler would regulate applauded Obama’s choice. AT&T called the nomination an “inspired pick,” while Comcast praised Wheeler for his “proven leadership.”

Three years later, Wheeler is being cheered by consumer advocates even as he is reviled by many Internet service providers (ISPs) and their Republican supporters in Congress.

With his 3-2 Democratic majority at the FCC, Wheeler blocked Comcast’s attempt to buy Time Warner Cable, demanded a $100 million fine from AT&T related to throttling of unlimited data, and put the entire fixed and mobile broadband industry under a stricter regulatory regime using the FCC's Title II common carrier authority. Both the NCTA and CTIA have sued the FCC to overturn the common carrier and net neutrality rules.

But while Wheeler surprised many outside observers, he didn’t surprise himself.

“My history has always been working with the insurgent, not the incumbent,” Wheeler told Ars in an interview at his Washington, DC, office. “I have always been the guy coming up the side of the hill, rather than the guy on the top of the hill pushing boulders down to stop them.”

When cable, led by Wheeler, was an underdog

Ars interviewed Wheeler at FCC headquarters on February 17, one day before his most recent attack on the cable industry—a plan to let customers watch TV channels without renting a set-top box. During the interview, Wheeler discussed his time as a lobbyist, his major decisions as FCC chairman, and his clashes with Republican commissioners. Wheeler also explained why he hasn't gone even further as chairman, rejecting stricter regulatory tools like rate regulation and last-mile unbundling for home broadband. (For more on that, see our companion article, "Why Tom Wheeler rejected broadband price caps and last-mile unbundling.")

Further Reading

In Wheeler's telling, back when he lobbied for the cable and wireless industries, they were the upstarts trying to unseat incumbents.

“You have to think about what I was lobbying for. The cable industry at that point in time was fighting being put out of business by this agency at the request of the broadcasters,” Wheeler said. “Broadcasters wanted to shut down the cable companies. They didn't want to give them access to programming because they didn’t want the content in the market, the competition in the market. And so I joined a crusade—we called it ‘plant a flower in the vast wasteland’—to have choice for Americans in what they see on television.”

Problems hampering the cable industry at that time included copyright restrictions on retransmission of broadcast TV signals, rights to pole attachments, and restrictions on pay cable (channels like HBO).

By the time Wheeler left the NCTA, cable companies were the ones with power to shut out newcomers. Wheeler said he found this out firsthand when he led a startup called NABU, which delivered 1.5Mbps service over cable TV lines but folded in 1985.

“I was the CEO of the first company to deliver high-speed data over cable systems,” Wheeler said. “And it failed, not because the technology didn't work but because we couldn't get on the cable systems.”

Further Reading

Wheeler acknowledged that NABU didn’t fail entirely because of cable company resistance. The company's target customers were people with home computers, and in 1985, Wheeler noted with a laugh, "There weren't that many home computers.” Still, the FCC chairman said he continued to run into roadblocks constructed by cable companies in the 1980s.

“Getting on a cable system has always been a decision that the cable operator made," he said. "I was involved in various startup services where I'd go hat in hand from cable operator to cable operator, [saying], ‘Can I please get on?’ I was one of the founding investors in the first pay-per-view service called Request TV and would go from cable operator to cable operator begging to get channel capacity. The first question was, ‘Well, what are you going to pay me?’”

When he arrived at CTIA in 1992, Wheeler said that the wireless industry was in the same underdog position cable had been in a dozen years earlier. Wireless carriers had to pay wireline phone companies “to terminate a call on a wired network, and they made the wireless call very expensive,” he said. “It was a knock-down, drag-out [fight]; it ended up getting fought here in front of the Commission, and I was in favor of lowering interconnection costs so you could become competitive.”

CTIA was still known by its original name, the Cellular Telecommunications Industry Association, when Wheeler arrived as CEO. He replaced the word "Industry" with "Internet" later in his tenure. The name change reflected mobile's expanding role, and the industry got substantially bigger with Wheeler as its chief lobbyist (though the explosive growth triggered by the iPhone and Android happened after he left). Both cable and wireless “grew to be incumbents, but I wasn’t there by the time they grew to be incumbents,” he said.

“My experience with Tom is that he is the underdog fighting against the powers that be.”

After leaving CTIA in 2004, Wheeler joined Core Capital Partners as a venture capitalist, spending nearly a decade as an investor. He also served on the boards of companies including EarthLink before taking over at the FCC.

As an investor, Wheeler impressed entrepreneurs such as Noah Glass, founder and CEO of a company called Olo, which makes digital food ordering technology that lets customers order meals from mobile devices. Besides investing in the company and serving on its board, Wheeler gave Glass advice for some difficult negotiations Olo had with makers of restaurant point-of-sale software systems. Failure in those negotiations could have sunk Olo's business plan, because software makers had no obligation to let the startup access their POS systems—just as cable operators had no obligation to help Wheeler's startups in the 1980s.

Wheeler urged Glass to read a book called The Master Switch by Tim Wu, who coined the phrase “net neutrality.” Glass said Wheeler’s counsel and Wu's book helped him understand “how an incumbent monopoly that isn’t acting like a good common carrier but is a closed network” can be “damaging to innovators.” Glass told Ars that he was surprised when consumer groups and comedian John Oliver cast Wheeler as “a wolf in sheep’s clothing. My experience with Tom is that he is the underdog fighting against the powers that be.”